Answer
A company might use budgeted costs instead of actual costs to compute direct labor rates when it wants to establish a stable, predictable cost structure for a longer period, which is particularly useful when dealing with fluctuating raw material prices or labor conditions. This approach can provide more consistency in pricing and budgeting.
Work Step by Step
A company might use budgeted costs instead of actual costs to compute direct labor rates when it wants to establish a stable, predictable cost structure for a longer period, which is particularly useful when dealing with fluctuating raw material prices or labor conditions. This approach can provide more consistency in pricing and budgeting.
